FIRS kicks off new corporate tax regime
By Enitar Ugwu (Lagos) and Mathias Okwe (Abuja)
CHRONIC loan defaulters in the nation's financial system may do well by turning over a new leaf in view of the advance stage of plans by all banks in the country to subscribe to the services of the three Credit Bureaux recently accredited by the Central Bank of Nigeria (CBN).
Relatedly, the three accredited Credit outfits - CRC Credit Bureau, Credit Registry, and XDL Credit Bureau - have written to the apex bank asking it to enforce part of the Credit Bureau operational guidelines mandating all financial institutions to obtain credit report from at least two credit bureaux before granting any loan facility to their customers.
Managing Director/Chief Executive Officer, CRC Credit Bureau, Tunde Popoola, disclosed this in Lagos at the weekend during a media briefing on the start of operations by his firm.
Meanwhile, all corporate account holders in banks would henceforth be taxed under a renewed bid by the Federal Inland Revenue Service (FIRS) to shore up revenue collection through a wider official dragnet aimed at eliminating tax evasion.
Already, the FIRS is on the verge of completing its Taxpayer Identification Numbers (TINs) data bank for all corporate bank account customers.
The TIN is a prerequisite for banks in the upload of tax payments on the Inter-switch platform and clearance of such payments into other banks and the CBN.
It is also required for business transactions with government agencies, opening of new bank accounts for current account holders or when customers transact business on such accounts.
Accordingly, banks have been directed to submit the list of all their corporate customers to the FIRS to enable the agency generate TIN for them. It is estimated that Nigerian banks have about one million corporate customers.
This new initiative was disclosed in the May 2009 Monthly Report of the FIRS released by the agency's Director in charge of Corporate Communications, Bassey Etim, in Abuja at the weekend.
Financial analysts are united on the point that the heavy loan portfolios of Nigeria banks emanated from non-performing loans taken by chronic loan defaulters. The CBN decided to licence credit bureaux to enable financial institutions access information on borrowers, which could aid the banks in making informed decisions on potential loan-seeker before the latter gets access to credit facilities.
A credit bureau is an institution that collates data on borrowers from various sources and makes them available to financial institutions for the purpose of informed lending.
To the lenders, a credit bureau comes in handy to reduce loan processing time and cost, level of non-performing loans and enhance informed lending decisions.
To borrowers, it facilitates access to credit based on the loan-seeker's integrity rather than on collateral/security, handling the intricacies of loan negotiation and the depersonalization loan access processes.
The CBN, it would be recalled, in October last year, released guidelines for the licensing, operation and regulation of Credit Bureaux in Section Five, Subsection Three (4) of the Guidelines stipulated that "all banks must obtain credit report from at least two (2) credit bureaux before granting any facility to their customers" while Section Five, Subsection Four (3) stated that "all financial institutions must have data exchange agreement with at least two (2) credit bureaux."
Popoola disclosed that CRC Credit Bureau has started operations with 12 banks, or about 70 per cent of the banking industry.
They are Access bank Plc, Bank PHB Plc, Diamond Bank Plc, First Bank Plc, FCMB Plc, GTB Plc, Intercontinental Bank Plc, Oceanic Bank Plc, Stanbic-IBTC, Standard Chartered bank of Nigeria, UBA Plc and Union Bank Plc.
He stressed that the firm has been working with these financial institutions in the last two years to enhance the quality of information and data coming into the bureau, adding that "the 12 banks have gone through series of training ranging from understanding our operations and technology to how to submit information to us and how to pull our products."
"We have also for four months engaged in pilot operations. This enabled us to test our systems and service delivery. During these four months, the banks enjoyed our products free of charge."
Under the new tax initiative, banks are expected to furnish the FIRS with the list of their individual bank account owners who are residents of the Federal Capital Territory (FCT) in addition to the list of their corporate customers. The FIRS collects personal income tax for residents of the FCT and members of the Armed Forces and the Police.
According to the report, banks may be disabled from the FIRS Pay Direct portal if they failed to furnish the FIRS with a list of their corporate customers to enable the service generate TIN for their other of customers.
The TIN is a unique number generated electronically as part of the registration process and assigned to a taxpayer, be it a company, an enterprise or individual for identification. The unique number eases the process of tracking taxpayers and access to their tax history and records.
The TIN shall be required from a tax-payer when making payments for the following taxes to collecting banks: Petroleum Profit Tax (PPT); Companies Income Tax (CIT); Capital Gains Tax; Education Tax; Value Added Tax (VAT); Withholding on corporate bodies; Stamp Duties for companies; National Information Technology Development Fund Levy; and Personal Income Tax.
In a recent presentation, Executive Chairman, FIRS, Mrs. Ifueko Omoigui-Okauru, stressed that without a clear knowledge of the taxpayers and their profiles, it would be "difficult to have any articulate plan or strategy for effective tax administration."
She added: "This would be further enhanced with the institutionalisation of the unique taxpayer identification system as is practiced in other developed tax jurisdictions. The FIRS Act empowers the FIRS to collaborate with states and local councils to make this happen."
